Blame the Weak Recovery on Larry Summers?
Why did Obama's White House flounder in its initial response to the economic crisis? In a review of Noam Scheiber's new book The Escape Artists, Rich Yeselson points out that when Larry Summers was the director of the White House National Economic Council, he put internal politics ahead of promoting good policy:
Summers is an inside angler but an inept one, whom the smoother Geithner and more dispassionate Orszag outmaneuver. Then there’s the famous matter of how much stimulus to go for. As Scheiber describes it, when Romer gives her fellow economist her estimate that $1.8 trillion over two years is needed in order to restore the economy’s lost output, Summers rejects the number as “impractical.” So Romer constructs a “reasonable compromise” and asks for $1.2 trillion, but also proposes smaller packages of approximately $600 billion and $800 billion. At that point, Summers’s thinking becomes clouded by the rules of Washington inside baseball which he flatters himself he has mastered during his earlier tenure in Washington. Adopting the preemptive mantle of political adviser, Summers cuts even the $1.2 trillion proposal from the draft memo because, as he says to Romer, ‘One point two trillion dollars is non-planetary. People will think we don’t get it.” By people, Summers means the president’s political advisers, who at that point were already on record saying that anything over a trillion dollars would be a loser in Congress. In short, Summers squanders his greatest comparative advantage over everyone else, that on these issues, his voice was the one the president trusted most. By surrendering without a fight to Rahm and the politicos, Summers prevents Obama from realizing how grave his economic team’s evaluation of the crisis was.